Town of Uniontown v. Landmark Development Co.

Citations: 469 So. 2d 565; 1985 Ala. LEXIS 3589Docket: 83-949

Court: Supreme Court of Alabama; April 4, 1985; Alabama; State Supreme Court

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An appeal by the Town of Uniontown regarding a judgment favoring Landmark Development Company is affirmed. The dispute centers on a 53-acre property originally owned by King Pharr Canning Company, which King Pharr transferred to Uniontown for no consideration. Uniontown subsequently issued $60,000 in industrial development municipal bonds to improve the property and entered a 15-year lease with King Pharr, including an option for King Pharr to purchase the property upon lease expiration in 1979. Lease payments were structured to cover Uniontown's bond debt service, ensuring self-liquidation of the bond issue. The agreements were made under the Wallace Act, which authorizes municipalities to promote industry while preventing pollution and does not permit municipalities to operate commercial enterprises directly. King Pharr assigned its rights to Landmark on July 27, 1978. In April 1979, Landmark expressed its intention to purchase the property and made the necessary payments as stipulated in the lease and option agreement.

Uniontown declared King Pharr in default of the lease agreement due to non-payment of rent and contested the validity of the option agreement. Landmark initiated a lawsuit against Uniontown for specific performance of this option agreement. Uniontown's defense argued that their agreements with King Pharr were governed by Code of 1975, 11-47-20, rather than the Wallace Act (Code 11-54-20). Uniontown also counterclaimed for $15,000 in expenses related to King Pharr's alleged breach of the lease, asserting that Landmark, as assignee, was responsible for this amount. 

The Perry Circuit Court ruled in favor of Landmark, concluding that the agreements were governed by the Wallace Act, which, although silent on granting purchase options, allowed for the option in question. Landmark was entitled to a deed after paying $5,000 per the option agreement, plus $8,802.73 for additional expenses. The trial court's decision, made without a jury, is upheld unless it is clearly erroneous, following established Alabama law that the findings of fact from a non-jury trial are presumed correct.

Uniontown contended that 11-47-20 should apply, which permits municipalities to dispose of land not needed for public purposes but does not authorize granting options to purchase. Previous cases established that cities could not enter into such contracts without complying with the Wallace Act. The trial court found that the parties intended to comply with the Wallace Act, supported by evidence that the land was conveyed to Uniontown without consideration, and the lease's recitals indicated that Uniontown had the authority under the Wallace Act to acquire and lease the property.

The Wallace Act, 11-54-20, et seq., empowers municipalities to grant private corporations options to purchase real property, as supported by the precedent set in Newberry v. City of Andalusia. The Newberry decision established that actions promoting self-liquidation and payment of industrial development revenue bonds are impliedly authorized, even if not explicitly detailed in the Act. Landmark contends that the rationale for an option to renew in Newberry extends to options to purchase. Conversely, Uniontown argues that the Newberry ruling hinged on the option being part of the lease consideration, which it claims is not the case in its agreement with King Pharr.

Evidence presented in the record, including testimonies from Uniontown’s mayor, indicates that the option to purchase was indeed part of the same transaction as the lease, serving as consideration for the conveyance of land to the city. Judicial interpretations from Tennessee and Kentucky affirm that statutory powers to buy, sell, and lease property include implied authority to grant purchase options, reinforcing the validity of such options as contractual consideration. 

The trial court ruled in favor of Uniontown, ordering Landmark to pay $5,000 under the option contract and reimburse $8,802.73 in expenses, affirming that the option constituted a bargained-for exchange. The trial court's findings are deemed factually supported, and the ruling aligns with the legislative intent of the Wallace Act to foster industrial and trade growth. The judgment is affirmed, with the concurrence of the Chief Justice and other justices.